“Misfits,” “stars,” and immigrant entrepreneurship

Prior research has shown that immigrants are more likely than natives to become entrepreneurs, and that entrepreneurs are disproportionately drawn from the extremes of the ability distribution. Using a large panel of US residents with bachelors’ degrees in scientific fields, we ask whether higher rates of entrepreneurship among immigrants can be explained by their position on the ability spectrum and establish four new facts about science-based and immigrant entrepreneurship. First, in this sample, an immigrant entrepreneurship premium exists only in science-based entrepreneurship. Second, this premium persists after controlling for ability (measured by paid employment wage residuals.) Third, a U-shaped relationship between ability and entrepreneurship exists only in non-science entrepreneurship; for science entrepreneurship, the relationship is increasing. Finally, the immigrant premium in science entrepreneurship is largest among immigrants with non-US degrees and those from non-English-speaking or culturally dissimilar countries. Stated preferences for self-employment do not explain the immigrant premium. The results suggest that immigrants may on average have higher levels of unobservable skills related to entrepreneurship.     

A case study on the internationalization process of a ‘born-global’ fashion retailer

This case study on Zara elucidates the expansion strategies used by both born-global and gradual global fast-fashion retailers based on theories of internationalization. Aspects related to knowledge sharing, resource-based theory, and psychic distance are overlaid with Zara's internationalization strategies to advance understanding of the role fashion plays in dynamic internationalization. Zara employs a high-risk, high-reward model of internationalization to defend its unique merchandise and retail position by remaining completely vertical. Zara's born-global expansion strategy engendered a psychic distance paradox in that it was very successful in distant markets early on. It is proposed that fashion retailers may take note of Zara's success through the proposed ‘dynamic strategic planning process’ for expansion in international markets. Researchers can test the proposed framework empirically to investigate the theoretical constructs for both gradual- and born-global firms.     

Simulating the Reform of Means‐tested Benefits with Endogenous Take‐up and Claim Costs*

Microsimulation models are commonly used to examine the distributional impact of reforms of the means‐tested benefit system. Take‐up behaviour is related to the level of entitlement, so reform may induce changes in take‐up. We develop a stochastic simulation method and apply it to a probit model of ‘income support’ take‐up by the UK pensioners. The method allows us to adjust net income for the welfare losses because of tangible or intangible claim costs. Endogenous take‐up and claim costs both have an important impact on the simulated outcomes of the policy reform.     

Foreign Money Shocks and the Welfare Performance of Alternative Monetary Policy Regimes*

The welfare properties of monetary policy regimes for a country subject to foreign money shocks are examined in a two‐country sticky‐price model. Money targeting is found to be welfare superior to a fixed exchange rate when the expenditure switching effect of exchange rate changes is relatively weak, but a fixed rate is superior when the expenditure switching effect is strong. However, price targeting is superior to both these regimes for all values of the expenditure switching effect. A welfare‐maximising monetary rule yields lower output and exchange rate volatility than price targeting for a wide range of parameter values.     

Accounting for the family in European income tax systems

Tax systems are expected to achieve many things at once andthis paper discusses the trade-offs involved in attempting toreconcile conflicting aims. It surveys the various instrumentsthat are used to take account of marriage and the presence ofchildren and describes the current systems in the 15 EuropeanUnion countries. The impact of alternative tax treatments ofthe family 'borrowed' from other countries is examined for theUK, using the tax-benefit microsimulation model, POLIMOD. Thepaper explores the implications of the alternatives for thetax paid by families of different types and for the work incentivesof individuals in different family situations.     

A New Metric to Gauge Household Economic Stress: Improving on the Misery Index

We present an improvement on the Misery Index that quantifies the economic stress that households are feeling today. Much of the economic stress in households today stems from the decline in household wealth that has come as a result of falling house prices, so we have added a measure of house price change to the Misery Index. Deteriorating economic conditions in most U.S. regions through the first three quarters of 2008 have resulted in increasing household economic stress as all components of the expanded Household Economic Stress Index increased. The components are the rate of change in the consumer price index, the unemployment rate, and rate of change in house prices. The authors show that this intuitive and simple index is useful in analyzing mortgage delinquencies both nationally and regionally.     

The sensitivity of poverty rates to macro-level changes in the European Union

The authors use the European Union-wide tax–benefit model,EUROMOD, to establish baseline rates of relative poverty in1998 for each of the Member States and then explore their sensitivityto (a) an increase in unemployment, (b) real income growth and(c) an increase in earnings inequality. They find that povertyrates are sensitive to such ‘macro-level’ changesbut that the size—and in some cases the direction—ofthe effect varies across countries. If such indicators are tobe used in judging the effectiveness of social policies, itis important that differences in responsiveness are fully understood.     

A New Framework for International Economic Relations

The Third Annual Hayek Memorial Lecture delivered in London on 16 June 1994 and revised to bring it up to date.     

The Challenge of the Global Business Revolution

This paper looks closely at a key hypothesis of Stephen Hymer,namely that a small number of giant corporations would soondominate each sector of the global economy. The article showsthat, although the nature of the large corporation has changedprofoundly, Hymer's basic insight has proven correct.